SEC News Digest

COMMISSION ANNOUNCEMENTS

The Commission announced the temporary suspension of trading in the securities of Markland Technologies, Inc. (Markland), commencing at 9:30 a.m. EDT on Aug. 27, 2008, and terminating at 11:59 p.m. EDT on Sept. 10, 2008. The Commission temporarily suspended trading in the securities of Markland due to a lack of current and accurate information about the company because it failed to file certain periodic reports with the Commission. The order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).

The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company.

Brokers and dealers should be alerted to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of Markland unless and until the broker or dealer has strictly complied all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of Markland until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, D.C. at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.

If any broker, dealer or other person has any information which may relate to this matter, John T. Dugan of the Boston Regional Office of the Securities and Exchange Commission should be telephoned at (617) 573-8936. (Rel. 34-58426)

SEC Votes to Modernize Disclosure Requirements to Help U.S. Investors in Foreign Companies

The Securities and Exchange Commission today voted unanimously to update and modernize the disclosure requirements for foreign companies offering securities in U.S. markets, making it easier for U.S. investors to gain access to timely financial information that can help them make better informed investment decisions.

The rule amendments approved by the Commission reflect advances in technology and other recent global changes, and bring the SEC's foreign company disclosure requirements into the 21st Century. The rule amendments eliminate requirements for foreign companies without SEC-registered securities to submit paper disclosures, and instead give investors instant electronic access to foreign company disclosure documents, in English, on the Internet. After a period of transition, foreign reporting companies also will be required to file their annual reports with the SEC two months earlier, making those submissions more timely and therefore more useful to investors. The rule amendments also facilitate the ability of U.S. investors to participate in cross-border tender offers and other business combinations.

"Today's action will make foreign companies' disclosures available to U.S. investors more quickly and without cost - and in English," said SEC Chairman Christopher Cox. "These changes to our regulation of foreign private issuers will encourage cross-border capital flows and eliminate needless barriers to our securities markets, so U.S. investors have better information about the securities of foreign companies."

John White, Director of the SEC's Division of Corporation Finance, added, "The action that the Commission has taken today in updating our rules governing foreign private issuers is particularly important in light of the ongoing globalization of our securities markets. We received many helpful public comments on the rule proposals, and we considered these comments carefully. An important goal that is achieved in the new rules is to fully protect investors without unduly burdening foreign private issuers."

Specifically, the Commission adopted three sets of rule amendments.

One set of amendments, called Foreign Issuer Reporting Enhancements, will update Securities Exchange Act filing requirements and enhance disclosure required by foreign private issuers in response to changes in foreign filing requirements, market practices, and other areas of SEC regulation. The rule amendments shorten the deadline for annual reports filed by foreign private issuers from six months to four months. The rule amendments also enable foreign issuers to test their eligibility to use the special forms and rules available to foreign private issuers once a year, rather than continuously; enhance the disclosures a foreign private issuer provides to investors regarding any changes in and disagreements with its certifying accountant in its annual reports and registration statements; and revise the annual report and registration statement forms used by foreign private issuers to improve certain disclosures provided in these forms.

A second set of amendments concerns Exchange Act Rule 12g3-2(b), which exempts a foreign private issuer from registering a class of equity securities based on submission to the SEC of certain information published outside the U.S. The exemption allows a foreign private issuer to have its equity securities traded in the U.S. over-the-counter (OTC) market without registration under Section 12(g). The adopted rule amendments will eliminate the current written application and paper submission requirements under Rule 12g3-2(b) by automatically exempting a foreign private issuer from Section 12(g) provided they meet specified conditions. As is currently the case, issuers must continue registering their securities under the Exchange Act to have them listed on a national securities exchange or traded on the OTC Bulletin Board.

The Commission also voted to adopt changes to its cross-border exemptions. These amendments are intended to expand and enhance the utility of the exemptions for business combination transactions, tender offers, and rights offerings and to encourage offerors and issuers to permit U.S. security holders to participate in these transactions on the same terms as other security holders. Among the amendments are codifications of existing interpretive positions and exemptive orders in the cross-border area, as well as amendments to allow specified foreign institutions to report beneficial ownership on Schedule 13G to the same extent as their U.S. institutional counterparts. The Commission also voted to provide interpretive guidance on several topics that come up frequently for practitioners in the cross-border area. (Press Rel. 2008-183)

The Securities and Exchange Commission today voted to publish for public comment a proposed Roadmap that could lead to the use of International Financial Reporting Standards (IFRS) by U.S. issuers beginning in 2014. Currently, U.S. issuers use U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Commission would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors. The proposed multi-year plan sets out several milestones that, if achieved, could lead to the use of IFRS by U.S. issuers in their filings with the Commission.

The increasing integration of the world’s capital markets, which has resulted in two-thirds of U.S. investors owning securities issued by foreign companies that report their financial information using IFRS, has made the establishment of a single set of high quality accounting standards a matter of growing importance. A common accounting language around the world could give investors greater comparability and greater confidence in the transparency of financial reporting worldwide.

“An international language of disclosure and transparency is a goal worth pursuing on behalf of investors who seek comparable financial information to make well-informed investment decisions,” said SEC Chairman Christopher Cox. “The increasing worldwide acceptance of financial reporting using IFRS, and U.S. investors’ increasing ownership of securities issued by foreign companies that report financial information using IFRS, have led the Commission to propose this cautious and careful plan. Clearly setting out the SEC’s direction well in advance, as well as the conditions that must be met, will help fulfill our mission of protecting investors and facilitating capital formation.”

Chairman Cox noted that since March 2007, the Commission and staff have held three roundtables to examine IFRS, including one earlier this month regarding the performance of IFRS and U.S. GAAP during the subprime crisis. Almost one year ago, the Commission issued a concept release on allowing U.S. issuers to prepare financial statements using IFRS.

Today, more than 100 countries around the world, including all of Europe, currently require or permit IFRS reporting. Approximately 85 of those countries require IFRS reporting for all domestic, listed companies.

Public comment on the SEC’s proposing release should be received by the Commission no later than 60 days after its publication in the Federal Register. (Press Rel. 2008-184)

ENFORCEMENT PROCEEDINGS

In the Matter of Euro Capital Incorporated

On August 26, the Commission issued an Order Making Findings, Staying Procedures and Delegating Authority pursuant to its acceptance of Euro Capital Incorporated's (Euro Capital) Offer of Settlement in this proceeding. Previously, on Jan. 4, 2008, the Commission instituted proceedings temporarily suspending Euro Capital's Regulation A exemption pursuant to Rule 258 of the General Rules and Regulations under the Securities Act of 1933 (Temporary Suspension).

The Order stays the current administrative proceeding and directs Euro Capital to comply with its undertaking to file a written request to withdraw its offering statement. The Order also delegates to the Director of the Division of Corporation Finance, or such staff as the Director may authorize, authority to accept Euro Capital's request. In the event that the Director of the Division of Corporation Finance accepts Euro Capital's withdrawal request, then the Commission will issue an order vacating the Temporary Suspension and dismissing this proceeding without prejudice. In the event that Euro Capital fails to comply with the undertaking, the Order specifies that the Temporary Suspension order will be converted into a permanent suspension.

Euro Capital consented to the entry of the Order without admitting or denying the findings therein. (Rel. 33-8953; File No. 3-12925)

Commission Orders Hearing on Registration Suspension or Revocation Against Markland for Failure to Make Required Periodic Filings

In conjunction with today's trading suspension, the Commission announced the issuance of an Order Instituting Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) against Markland Technologies, Inc. (Respondent). The Order alleges that the Respondent is delinquent in its periodic filings with the Commission, having not filed any periodic reports since it filed a Form 10-QSB for the period ended Sept. 30, 2005. The Respondent did not respond to a delinquency letter sent to it by the Commission's Division of Corporation Finance requesting compliance with its periodic filing obligations.

A hearing will be held by an Administrative Law Judge to determine whether the allegations contained in the Order are true, to afford the Respondent an opportunity to establish any defenses to such allegations, and to determine whether it is necessary or appropriate for the protection of investors to suspend for a period not exceeding twelve months, or revoke the registration of each class of securities of the Respondent registered pursuant to Section 12 of the Securities Exchange Act of 1934. The Order requires the Administrative Law Judge to issue an initial decision no later than 120 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-58427; File No. 3-13147)

According to the Commission, Boucher helped raise around $20 million for the companies by falsely representing that the investments were secured by real estate, when in reality one of the companies owned no property, and the other owned a single property that was wholly underwater in debt. The Commission also sued the owners of each company, John E. Brake and Gary P. Johnson (both of Southern California) for misappropriating millions of dollars of investor funds to finance everything from beachfront homes to undisclosed side businesses. Boucher and Johnson have settled with the Commission without admitting or denying the allegations.

According to complaints filed today in federal district court in San Francisco, from 1999 through 2005, the defendants collectively raised about $20 million from investors based upon misrepresentations that the money would be used to fund large-scale real estate development projects and that the investments were secured by real property. In reality, the investments were not secured: one development company never owned property, and by the summer of 2002, the other company's lone property was so heavily debt laden that its debts exceeded potential profits. In the end, neither company successfully developed a real estate project, and investors lost millions of dollars.

The Commission alleges that many investors became interested because Boucher - a hedge fund manager and the author of the book The Hedge Fund Edge - recommended the investments in a monthly newsletter he circulated to his advisory clients.

The Commission's complaints allege that the defendants misused investor funds to pay for a wide variety of personal expenses. Among other things, Brake allegedly used investor funds to pay for a beachfront home rental in Carmel, California, luxury automobiles, a personal chauffeur, private jet travel, jewelry and designer clothing, while Johnson used investor funds to launch a failed furniture business. The Commission also alleges that Boucher used investor money to pay a portion of the mortgage on his personal residence.

Boucher, without admitting or denying the allegations in the Commission's complaint, has agreed to a permanent injunction from further violations of Sections 17(a) and 17(b) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder (Exchange Act), and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Boucher will also pay a $100,000 civil penalty. In addition, Boucher has consented to the institution of public administrative proceedings against him in which he will be barred from serving as an investment adviser with a right to reapply after five years.

Johnson, without admitting or denying the allegations, has likewise agreed to a permanent injunction from further violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Johnson has also consented to an order requiring him to disgorge more than $1.8 million in ill-gotten gains and approximately $700,000 in prejudgment interest, and to pay a civil penalty of $120,000.

The Commission today filed a settled civil action in the United States District Court for the District of Columbia charging Con-way Inc. (Con-way), a San Mateo, California international freight transportation company, with violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act. According to the complaint, a Philippines-based firm controlled by Con-way made approximately $417,000 in improper payments to numerous foreign government officials between 2000 and 2003. Without admitting or denying the allegations in the Commission's complaint, Con-way agreed to pay a $300,000 civil penalty.

The complaint alleges that Emery Transnational, a Manila, Philippines-based firm engaged in shipping and freight operations in the Philippines, was controlled by a wholly-owned, U.S.-based subsidiary of Con-way. The complaint further alleges that between 2000 and 2003, Emery Transnational made approximately $244,000 in improper payments to foreign officials at the Philippines Bureau of Customs and the Philippine Economic Zone Area. The complaint alleges that these payments were made to induce these foreign officials to violate customs regulations, settle customs disputes, and reduce or not enforce otherwise legitimate fines for administrative violations.

The complaint also alleges that, during this period, Emery Transnational made approximately $173,000 in improper payments to foreign officials at fourteen state-owned airlines that conducted business in the Philippines. The complaint alleges that these payments were made to induce airline officials to improperly reserve space for Emery Transnational on the airplanes, to falsely under-weigh shipments, and to improperly consolidate multiple shipments into a single shipment, resulting in lower shipping charges.

According to the complaint, none of the improper payments made by Emery Transnational were accurately reflected in Con-way's books and records, and Con-way knowingly failed to implement a system of internal accounting controls concerning Emery Transnational that would both ensure that Emery Transnational complied with the FCPA and require that the payments it made to foreign officials were accurately reflected on its books and records. As a result of the conduct described above, the Commission's complaint alleges violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Securities Exchange Act of 1934.

In a related administrative proceeding, the Commission today issued a settled cease-and-desist order against Con-way finding that Con-way violated the books and records and internal controls provisions of the Exchange Act in connection with the improper payments made by Emery Transnational. Without admitting or denying the Commission's findings, Con-way consented to the issuance of an order that requires Con-way to cease and desist from committing or causing any violations and any future violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act. [SEC v. Con-way Inc., Civil Action No. 1:08-CV-01478 (D.D.C.) (EGS)] (LR-20690; AAE Rel. 2866); Administrative Proceeding In the Matter of Con-Way, Inc. - (Rel. 34-58433; AAE Rel. 2867; File No. 3-13148)

INVESTMENT COMPANY ACT RELEASES

Aberdeen Asset Management Inc. and Aberdeen Funds

A notice has been issued giving interested persons until Sept. 19, 2008, to request a hearing on an application filed by Aberdeen Asset Management Inc. and Aberdeen Funds for an order exempting them from Section 15(a) of the Investment Company Act and Rule 18f-2 under the Act. The order would permit the applicants to enter into and materially amend subadvisory agreements without shareholder approval and would grant relief from certain disclosure requirements. (Rel. IC-28364 - August 25)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Change

A proposed rule change filed by the Philadelphia Stock Exchange relating to the Exchange's fee schedule concerning Complex Orders has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58420)